Commentary

By Charlene Crowell

This year marks the 12^th anniversary of an important consumer protection that sprang as a response to millions of foreclosures and the resulting Great Recession. Today, just as then,

all consumers need assurances that whether purchasing goods or services, they pay a fair price. For the first time in our nation’s history, a federal agency’s sole role became dedicated to consumers’ financial protection.

Since its creation, the Consumer Financial Protection Bureau (CFPB) has honored its mission by returning a cumulative total of $17.5 billion to 200 million consumers who have been harmed by violations of federal consumer financial protection law. It’s Victim Relief Fund administers the return of hard-earned monies to consumers as cancelled debts, reduced principal, and other illegal transactions.

A second use of this same fund underwrites costs for consumer education and financial literacy outreach with two distinct constituencies: economically vulnerable consumers who want to improve their approach to money management, and recent veterans who are transitioning from service member to veteran life, as well as military widows and widowers.

One-on-one financial coaching helps consumers learn how to manage their money more effectively and achieve their financial goals. While gaining key insights on ways to distinguish between useful financial products and frauds, consumers of different cultural, ethnic, racial, and other backgrounds become alert to scams targeted to urban and rural communities.

Each day the CFPB receives an average of 3,000 complaints. Additionally, the agency reports that 50 million consumers have accessed its web-based Ask CFPB database for answers to hundreds of common financial questions.

But despite these measurable and successful efforts, many of the same organizations that opposed CFPB’s creation over a decade ago have since shifted their goals to weakening the agency in a variety of ways. Recent court filings continue to question whether the agency meets constitutional muster, while others seek to change the agency’s current independent financial status to annual Congressional appropriations. Opponents also want to change the agency’s leadership from a single director to a multi-member commission, curtail the number of businesses subject to its scrutiny, and more.

In response to these renewed anti-consumer efforts, an 84-member coalition representing civil rights, unions, consumer advocates, antitrust and general public interest groups at the local, state and national levels sent a strong statement of support for CFPB to key committee leaders in the U.S. House and the Senate.

“Americans see an agency responsibly undertaking the job given to it by Congress: making consumer financial markets fairer and more transparent, putting money back in the pockets of wronged consumers, and policing rules of the road that make the financial system work better for responsible businesses and consumers alike”, wrote the advocates.

“It has required lenders who break the law to return billions of dollars directly to individuals trying to make ends meet; it is establishing a more level playing field in crucial areas of the market; and it is doing so in an accountable and transparent fashion,” the advocates continued.

One emerging area of concern for consumers and CFPB is medical debt that impacts over 100 million Americans – accounting for a staggering $433.2 billion of out-of-pocket expenses, according to CFPB.

“Poor medical billing and collection practices can result in patients delaying or declining needed medical care while they struggle to cope with the financial consequences of the debt burden placed upon them, even when that debt burden derives from predatory pricing, faulty, inaccurate billing, or insurance company runarounds,” noted Rohit Chopra, CFPB’s Director in a July 11 hearing on Capitol Hill. “In fact, consumers report that errors in medical billing and insurance payment are common. Among those with medical debt, more than four in ten say they received an inaccurate bill, and nearly seven in ten say they were asked to pay a bill that should have been covered by insurance.”

“While medical payment products can offer an enticing promise of cost savings, convenient payment plans and administrative ease for medical providers, our research indicates that in many cases, patients who use these products end up worse off…Our research shows that these payment products have less favorable terms than other general credit products and can land patients with significant amounts of deferred interest. Indeed, over a three-year period, patients paid $1 billion in deferred interest on medical credit cards. This deferred interest isn’t something that’s fair or transparent — people can find themselves hit with large and unexpected interest costs even when they’ve been making payments on the bill all along,” added Chopra.

For the Center for Responsible Lending (CRL), a nonprofit, non-partisan research and policy advocacy organization that called for CFPB’s creation, and continues to defend the embattled agency, the key difference between the CFPB and its opposition is akin to the difference between right and wrong.

“The Bureau curbs worst practices, punishes repeat offenders, and creates a stable regulatory environment for consumer finance,” wrote CRL to a subcommittee of the House Financial Services Committee. “Inversely, those who stand to benefit from neutering the CFPB peddle in worst practices, break the law repeatedly, and seek to exploit an inconsistent regulatory environment with unsafe products and services.”

Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.